Lower Denial Rates, But More Questions

Lenders Are Granting More Mortgages In Chicago, But They're Also Less Likely To Track An Applicant's Race.

April 13, 1999|By Melissa Wahl, Tribune Staff Writer.

Whether lenders are discriminating against mortgage customers in Chicago has become more difficult to tell, in part because banks and others are no longer keeping track of race data the way they are required to by law.

In 1997, 42 percent of Chicago mortgage applications that were turned down by lenders had no information about the applicant's race, according to the Woodstock Institute, a development advocacy group in Chicago. That's up from 34 percent in 1996 and 10 percent in 1991, the first year race data were collected.

FOR THE RECORD - Additional material published April 14, 1999:Corrections and clarifications.An article in Tuesday's Business section omitted the standing of LaSalle Bank F.S.B. as Chicago's largest mortgage lender. It lent $339 million in mortgages in 1997. The Tribune regrets the error.

"It's crazy, because we can't tell what's going on. It also means the regulators aren't doing their job," said Malcolm Bush, president of Woodstock, which released its annual fact book on community lending Monday.

The book looks at mortgage lending data from 1997, the latest year for which information is available.

Based on the available data, the book showed that lenders in 1997 denied Chicago mortgage applications for 16.4 percent of Asian applicants, 23.9 percent of blacks, 17.1 percent of Hispanics and 12.8 percent of whites.

The denial rate was up from 14.6 percent of Asians a year earlier, but remained virtually the same for other racial groups in the short term. Since 1991, however, the rejection rates have fallen across the board, declining from 18.7 percent of Asians, 36.1 percent of blacks, 21.8 percent of Hispanics and 13.5 percent of whites.

The lenders that made the most mortgages in Chicago in 1997 were First Chicago NBD Mortgage Co., with $317 million; Chase Manhattan Mortgage Corp., with $290 million, and Citibank F.S.B., with $286 million.

Bush says race data are especially important for Chicago, which has what he called the nation's most racially segregated housing market. If a lender seems to be discriminating, neighborhood groups can try to persuade the institution to boost lending in their areas, he said.

Regulators also scrutinize the data and turn serious cases over to the Department of Housing and Urban Development.

The recent shortfall in racial data is partly because banks are not required to collect race information on applications taken over the phone or electronically, methods that more and more customers are using.

David Manning, director of government relations for the Community Bankers Association of Illinois, said Home Mortgage Disclosure Act data can be "very tricky."

He said it is possible that technical violations, which are less egregious than intentional violations, have occurred. It is possible some lenders have forgotten to report race data on refinancings and home-improvement loans, which have become more popular in recent years, Manning said.

He also said it would not be surprising if banks did not ask for race data over the phone, which they may do.

When banks were first forced to ask for racial information in 1991, Manning said, "There was concern that asking would imply to borrowers that race was a determinant in whether they got the loan."

Outside the racial data, Woodstock's fact book shows that the number of loans in Riverdale and Fuller Park rose the most over the six-year period ended in 1997, up 510 percent and 582 percent, respectively.

Mostly that's because these low-income areas had so few loans to begin with. Borrowers in Riverdale, which has a median household income of $7,071, received 61 mortgages in 1997. In Fuller Park, with median income of $8,906, there were 75 mortgages in 1997.

The biggest percentage declines in mortgages granted occurred in the middle-income neighborhoods of Norwood Park, which saw a 21 percent drop over the six years, to 1,163 mortgages, and Edison Park, which had a 26 percent decline, to 386 mortgages.